Goldman Sachs is investing almost $10 million in a government program to reduce recidivism rates among adolescent men.
Earlier today, New York City Mayor Michael Bloomberg announced that Goldman Sachs would provide a $9.6 million loan to pay for a new four year program to reduce the rate at which teen boys incarcerated at Rikers Island reoffend. Goldman Sachs is providing the financing through a social impact bond and will only be repaid if the program reduces recidivism rates by more than 10%. Currently, nearly 50% of the young men released from Rikers reoffend within one year.
According to the New York Times:
The Goldman money will be used to pay MDRC, a social services provider, to design and oversee the program. If the program reduces recidivism by 10 percent, Goldman would be repaid the full $9.6 million; if recidivism drops more, Goldman could make as much as $2.1 million in profit; if recidivism does not drop by at least 10 percent, Goldman would lose as much as $2.4 million.
“New York City is continually seeking innovative new ways to tackle the most entrenched problems, and helping young people who land in jail stay out of trouble when they return home is one of the most difficult – and important – challenges we face,” said Mayor Bloomberg in a press release. “As the first city in the nation to launch a Social Impact Bond, we are taking our efforts to new levels and we are eager to see the outcome of this groundbreaking initiative.”
Under the program, the Adolescent Behavioral Learning Experience (ABLE), male inmates aged 16 to 18 will receive personal responsibility education, training and counseling, with the goal of reducing the likelihood of reincarceration.
“We’re proud to work with Mayor Bloomberg and his team on this innovative approach to harness private sector financing for important public initiatives,” said Lloyd Blankfein, CEO and Chairman of Goldman Sachs, in a press release. “We believe this investment paves the way for a new type of instrument that enables the public sector to leverage upfront funding from the private sector.”
We've written previously about the potential for social impact bonds in the juvenile justice system and will be following this story closely. What do you think? Are social impact bonds the way to go?
For more coverage:
- NYT: Goldman to Invest in City Jail Program, Profiting if Recidivism Falls Sharply
- Washington Post: Goldman Sachs to invest almost $10M in NYC jail program as city tests social impact bonds
- WSJ: In Social Services Experiment, Goldman Sachs Invests in City Jail
- Philanthropy Today: NY to Try Social-Impact Bonds with $10-Million from Goldman Sachs
- Reclaiming Futures: New Financing Tool for Social Programs Opens Doors for Juvenile Justice
Liz Wu is a Digital Accounts Manager at Prichard Communications, where she oversees digital outreach for Reclaiming Futures and edits Reclaiming Futures Every Day. Before joining the Prichard team, Liz established the West Coast communications presence for the New America Foundation, where she managed all media relations, event planning and social media outreach for their 6 domestic policy programs. Liz received a B.A. in both Peace and Conflict Studies and German from the University of California at Berkeley. She tweets from @LizSF.
*Photo at top by Flickr user 401(K) 2012
Updated: February 08 2018